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Google(GOOG) is the second most popular stock among billionaire hedge fund managers. The stock lost 2.3% as of April 9. We are optimistic about Google as well. The stock's 2013 forward P/E ratio is less than 13. It is slightly more expensive than Apple but the stock is the undisputed leader of the search business. It is expected to increase its earnings by nearly 20% per year over the next few years. We expect that Google will outperform the market over the next five years.
David E. Shaw,
Chase Coleman, and
Ken Fisher have large positions in Google.
El Paso(EP) is the third most-popular stock among billionaire hedge fund managers.
Carl Icahn hit the jackpot by investing more than a $1 billion before its merger with
Kinder Morgan was announced. He had $1.9 billion in the stock at the end of December. This is a merger arbitrage play that returned 13.9% since the beginning of this year.
News Corp.(NWSA) is the fourth most-popular stock among billionaire hedge fund managers. This is a conservative long-term play. The stock was a real bargain last summer. Billionaire fund managers were greedy when others were fearful. News Corp underperformed the market this year, returning 7.2% through April 9
Steven Cohen and John Paulson are among News Corp investors (see
John Paulson's stock picks).
Medco Health Solutions(MHS) is the fifth most-popular stock. This is also a merger arbitrage play. The stock returned more than 25% this year until its merger with
Express Scripts(ESRX) closed in early April.
As you can see hedge funds' top five stock picks performed even better than the rest of their stock picks. These five stocks had an average return of more than 20%. Our billionaire hedge fund managers became billionaires because of their stock picks. Their recent performance shows that they still have their magic touch.